Leases was because IAS 17 operating lease commitments were not recognised on the balance sheet and consequently were recorded outside of a lessee s double entry system She then said that the staff recommended approach 1 based on cost considerations She also said that paragraph 21 of the agenda paper included a table comparing both approaches based on cost considerations She then opened the discussion to the Board Several Board members disagreed with the staff conclusion that approach 2 would be more costly for preparers They said that the information should be available by any entity regardless of the approach taken Another concern was related to the fact that approach 2 was perceived as more connected easier to understand and would better explain the impact on transition The staff analyst said that they still believed that alternative 2 was more costly because preparers would have to capture information that was outside of the financial statements The Board members expressed disagreement because the cumulative catch up would have to be recorded no matter what approach was taken One Board member suggested adding in approach 2 the information related to rental expense that was being required only under approach 1 He said that whatever approach was taken it should be principles based because either approach would not help to explain on its own the cumulative catch up He then asked about the impact of transition on the interim financial statements He understood that the effects should be disclosed in the first interim financial statements rather than at year end and that was reflected in approach 2 The staff analysis responded that they were not recommending mandating any particular requirement at interim The Board member said that given the requirement of IAS 34 the information should be provided anyway The staff analyst confirmed that IAS 34 required the explanation of any material effect based on new standards and said that approach 2 would help provide the information at interim and final The project manager then said that paragraph 16a of IAS 34 said that if those policies or methods have been changed a description of the nature and effect of the change so she said that if there was a significant difference they would expect disclosures of this information Another Board member said that she was concerned that when they were not making specific amendments to IAS 34 users would understand that there were no specific requirements for interim financial statements She suggested including an observation in the basis of conclusions about how the Board expected users to follow IAS 34 One Board member asked why they were not following the requirements of IAS 8 for transition The staff analyst clarified that in the previous meeting it was decided to provide an alternative between a full retrospective and a modified retrospective approach The discussion held today was about aspects of the modified retrospective approach so if an entity chose a full retrospective approach they would be following the requirements of IAS 8 Another Board

IAS 17 – Meaning of 'incremental costs' its agenda but commented on the proposed wording in the final agenda decision Several Committee members commented on the first two sentences in the penultimate paragraph of the final agenda decision noting that there should be references to the accounting literature that formed the basis for the statements the Committee was making in these sentences Several other Committee members highlighted a disconnect between the results of the outreach performed on the leasing project and some comments received on the tentative agenda decision which indicated that there was diversity in practice Another Committee member suggested that the Committee should state that the reasons for not taking this issue onto its agenda were because a this was not an urgent issue and b the issue would be addressed by the leasing project rather than getting into whether there was diversity in practice and whether internal costs would qualify as incremental costs Another Committee member also suggested removing the sentence in the final agenda decision that states that the Committee noted that there does not appear to be significant diversity in practice on this issue He noted that he was concerned that there may be more diversity in practice than the Committee thought In response to the comment made by the previous Committee member a further Committee member referred to the fact that a comment letter had been received from a real estate industry participant highlighting the issue of diversity in their industry Another Committee member pointed out that the final agenda decision proposed by the staff reflected the conclusions reached by the Committee in the previous discussions on this issue Another Committee member noted that he did not support the recommendation for the Committee not to take this issue onto its agenda He noted that this was an interpretive issue adding that there were people who believe there was no GAAP difference between US GAAP and IAS 17 and those who had adopted a policy of capitalising these costs had generally followed a US GAAP approach on the understanding that US GAAP and IFRS were the same on this issue The Chairman of the Committee called a vote The overwhelming majority of the Committee members agreed to proceed with the staff recommendation subject to wording changes to the final agenda decision Two Committee members did not vote in favour of the staff recommendation Related Topics Projects IFRS Interpretations Committee agenda discussions Standards IAS 17 Leases Quick links Finalised agenda decision Deloitte comment letter on tentative agenda decision on IAS 17 Meaning of incremental costs Related news We comment on a number of tentative agenda decisions of the IFRS Interpretations Committee 19 Jan 2016 IASB issues new leasing standard 13 Jan 2016 We comment on a number of tentative agenda decisions of the IFRS Interpretations Committee 30 Nov 2015 We comment on a tentative agenda decision of the IFRS Interpretations Committee 01 Jun 2015 IASB staff publishes update on the leases project 24 Feb 2015 We comment on a number of tentative agenda

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Robert Bruce interviews to talk about the latest news on the development implementation and experience of integrated reporting around the world Robert Bruce interviews Alan Teixeira 12 Aug 2015 In this interview Robert Bruce talks with Alan Teixeira who after ten years at the IASB recently joined Deloitte as Global Director of IFRS Research about how the standard setting world has changed what challenges lie ahead why he has joined Deloitte and what he intends to achieve in his new role Robert Bruce interviews Sir David Tweedie Chairman of the International Valuation Standards Council 18 Mar 2015 In this interview Robert Bruce catches up with Sir David Tweedie former Chairman of the International Accounting Standards Board IASB and now Chairman of the International Valuation Standards Council IVSC Robert Bruce interviews Insights on Integrated Reporting 02 Dec 2014 In this interview Robert Bruce catches up with Paul Druckman Chief Executive Officer International Integrated Reporting Council IIRC on the latest news from the IIRC They discuss the status and take up of Integrated Reporting IR around the world the B20 s endorsement of IR the priorities of the IIRC looking forward and the benefits of IR experienced by early adopters and the current debate about assurance on IR amongst other items Robert Bruce interviews Assurance on integrated reporting 18 Nov 2014 In this interview Robert speaks with Michael Nugent Technical Director Framework Development International Integrated Reporting Council IIRC They discuss the possible options for assurance on integrated reporting considering the two papers on assurance that the IIRC issued for comment in July 2014 comments are due 1 December and the comments that have been raised at roundtables that have taken place around the world on this topic Robert Bruce interviews IFRS 9 Financial Instruments 24 Jul 2014 In this interview Robert speaks with Andrew Spooner Lead IFRS Financial Instruments Partner and Kush Patel Director in the UK IFRS Centre of Excellence They discuss the key components of IFRS 9 with comparisons to the standard it replaces IAS 39 Financial Instruments Recognition and Measurement Robert Bruce interviews Impact of IFRS 9 on banking industry 24 Jul 2014 In this interview Robert speaks with Andrew Spooner Lead IFRS Financial Instruments Partner Mark Rhys Global IFRS for Banking Co Leader and Tom Millar Global IFRS Banking Survey Leader They discuss the impact of the new expected loss model and amendments to the classification and measurement requirements for financial assets They also share insights from Deloitte s Fourth Global IFRS Banking Survey Ready to Land Robert Bruce interviews A detailed look at the new revenue framework IFRS 15 Revenue from Contracts with Customers 23 Jun 2014 In this interview Robert speaks with Phil Barden a Partner in the Deloitte UK IFRS Centre of Excellence and Amy Haworth a Senior Manager in the Deloitte UK IFRS Centre of Excellence They discuss in greater detail the core principles underpinning the IFRS 15 framework and potential issues that certain IFRS reporters may encounter when implementing this standard They additionally discuss certain guidance

Leases under the new leases standard in the year of implementation if there would be additional disclosures to compensate for that situation and help users to understand the P L The staff responded that it was already decided to have enough disclosure requirements for new leasing activities although she acknowledged that it would not be a perfect comparison The Board member asked if the information should be presented with some warnings in relation to the lack of comparability in the P L The Vice Chairman said that doing that could set a bad precedent which other Board members agreed with The Project manager also indicated that the total cash flow would be disclosed and users could have more information about lease activity One Board member disagreed with not mandating a full retrospective application given the impact of the new standards he said that the economics would not change but the presentation would change He said that the situation for revenue was different Further he suggested to use the modified approach but with full restatement of comparatives The staff responded that the feedback received was mostly focused on retrospective application and cost implications Another Board member said that he supported the staff recommendation He said that preparers still would have the obligation to explain their financial statements He then asked about the impact of the transition requirements on interim financial statements The project manager said that users should apply IAS 34 The Board member suggested given the importance of the standard to explain in the drafting how the standard was expected to be applied in interim financial statements The Chairman called to vote The Board members Approved the staff recommendation to permit a lessee to choose either a fully retrospective approach or a modified respective approach on transition 13 votes Approved the staff recommendations included in the agenda paper for the modified retrospective approach 12 votes in general and 8 votes for the disclosure requirements Approved the staff recommendations that would require a lessor to continue to apply its current accounting for any leases that were ongoing at the date of initial application with the exception of accounting for subleases all members agreed Approved the staff recommendations for first time adopters 13 votes Agenda Paper 3B Transition Sale and Leaseback Transactions The staff introduced the agenda paper Below is a summary of the staff recommendations the new leases standard would not require reassessment of historic sale and leaseback transactions to determine whether a sale occurred in accordance with IFRS 15 with respect to sale and leaseback transactions that were classified as finance leases under IAS 17 a seller lessee should not perform any retrospective accounting specific to the sale and leaseback arrangement with respect to sale and leaseback transactions that were classified as operating leases under IAS 17 a seller lessee should not perform any retrospective accounting specific to the sale and leaseback arrangement Instead the staff recommended that a seller lessee should account for i the leaseback in the same manner as any other operating lease that was ongoing at the date of initial application ii any deferred losses that relate to off market terms at the date of initial application as an adjustment to the leaseback ROU asset iii any deferred gains that relate to off market terms at the date of initial application as an adjustment to the lease liability that a seller lessee would be required to apply the partial gain recognition approach only to new sale and leaseback transactions entered into after the date of initial application One Board member asked if by not requiring retrospective accounting the standard would provide a window of opportunity for structuring transactions using the old rules The staff acknowledged that it was a risk but they decided their recommendation based on cost considerations Another member suggested introducing a clarification that the grandfathering would only be applicable for sales and leaseback transactions entered into up to the publication of the standard to avoid structuring opportunities There was support for this suggestion One member asked if the requirement for not reassessing was mandatory meaning the standard would prohibit reassessment or an option The staff confirmed that it would be mandatory for all entities Then the Board member suggested that users should not be allowed to adopt the new lease standard before IFRS 15 She said that there could be conflicts for early adopters that could early adopt one standard but not early adopt the other one The Project manager said that depending on decisions of effective date or earlier application that conflict would be possible not only for sale and leaseback transactions but there could be other applicable cases One Board member disagreed with the requirement in paragraph 29b which stated that any deferred gain that related to off market terms should be recorded as an adjustment to the liability He said that the adjustment should be recorded against the ROU asset as an adjustment because the liability should only represent the present value of the minimum lease payments any off market terms would be captured in the minimum lease payments he also said that otherwise the asset would be overstated The project manager and other Board members indicated agreement with his suggestion The Chairman called to vote and the Board decided the following The standard would indicate that historic sale and leaseback transactions should not be reassessed to determine whether or not a sale occurred in accordance with IFRS 15 Note the change in the terms should not instead of would not require was suggested during the discussion Approved the staff recommendations for sale and leaseback transactions that had been classified as finance leases under IAS 17 Approved the staff recommendation for sale and leaseback transactions that had been classified as operating leases under IAS 17 with the amendment suggested by one Board member that any deferred gains arising from off market terms should be adjusted against the ROU asset instead of the liability Approved the staff recommendations for the approach for